After much debate and public hearings, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) has issued Resolution ANP n. 785/2019, aimed at regulating the procedures related to the assignment of concession agreements of oil and natural gas (E&P), as well as the rules applicable to security interests on such concession agreements.

Such a regulation has been long-awaited by the market in general, as it affords legal certainty regarding the assignment of concession agreements in the oil & gas industry and it lays out the rules related to the Reserve Based Lending (RBL) in Brazil.

The new regulation is already in force and must be followed by the interested parties. A few of the legal provisions are noteworthy, such as:

1. The negotiation and signing of agreements that afford rights over credits arising out of the concession agreements and/or quota/shares of the legal entity do not require the Agency´s prior approval, but only a duty to inform;
2. The Lender will be allowed to monitor the performance of the E&P concession agreement, but not exercising any right whatsoever;
3. Any act related to the foreclosure of the security interest must be done according to the procedures set forth in the regulation;
4. If there is any change in connection with mergers and acquisitions, the interest party must secure beforehand ANP´s prior approval regarding the corporate reorganization.

It is clear that ANP´s intention underlying the new regulation is to foster the entry of new players in the Brazilian market and to bring the current regulation closer to best international practices within the industry. The new regulation also comes in a moment where the oil & gas industry in Brazil is heating up again and that the Federal Government is dedicated in attracting more foreign investments.